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  • takes2serious takes2serious Aug 10, 2011 12:01 PM Flag

    What's changed

    I trade STD when I think it gets mispriced. It is one of two banks that have big developing market exposure, but get dragged down as European banks. The other one I like a lot better is little known in the US, but it trades here on the pinks on very little volume. It's Standard Chartered (SCBFF).

    I don't think I ever mentioned Standard Chartered here because I hate banks in general, and people would think I was crazy, but it's actually one of the five core stocks in my retirement account. It's the one bank in the world that I would (and do) own. Not recommending it. I don't ever recommend anything. Just explaining taht I tend to add and subtract from my Standard Chartered position rather than STD.

    STD definitely has more South American exposure, but it also has more European expsoure, last I looked. When I play Brazil I actually do it with home builders.

    In response to your question about who might become one of the major European banks, I have no idea. The Germans banks may simply increase their domination in the end.

    One outside possibility is that a strong developing country makes a play on European banking. China is in an interesting spot here. They would like to help their largest customer (Eurozone), but people who think they will bail out Europe directly are crazy. They aren't stupid.

    China is griping about US devaluation of the dollar and its effects on Treasury real returns for foreign holders. Look at what China's Treasury holdings are doing and you get a clue that they would like to invest their dollars elsewhere. They've been buying foreign equity assets, but mostly commodity assets: energy, agriculture, mining, etc. Eventually, I expect them to buy other equities outside the commodity space. If they want to help their biggest customer why not buy one of the big banks at distressed prices and pump in a bunch of capital. That makes a lot more sense than buying Euro sovreign debt directly to me.

 
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